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TMI Blog2019 (6) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 30, 2015 passed by the Adjudicating Officer (hereinafter referred to as, 'AO') of Securities and Exchange Board of India (hereinafter referred to as, 'SEBI') imposing a penalty of Rs. 4 crores for failure to make disclosures under Regulations 13(3), 13(4A) read with 13(5) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as, 'PIT Regulations') and Regulations 29(2), 29(3), 30(2) and 30(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as 'SAST Regulations'). 2. The facts leading to the filing of the appeal is, that in the year 1994 Parikh Herbals Pvt. Ltd. was incorporated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e SAST Regulations. It was contended that the physical share certificates had been lost or misplaced and were not traceable. 5. Considering the aforesaid stand taken by the appellant, the AO summoned the Registrar and Transfer Agent (RTA) of the Company who submitted that the RTA had received 5,23,000 shares on different dates for transfers and that the transfers were effected after it was approved by the Transfer Committee of the Company. It was also submitted that the transfer was approved only after due compliance of all the requirements including verification of the signatures of the appellant on the share transfer forms from the specimen signatures of the appellant maintained in the Company. The appellant thereafter filed written sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost. c. The signatures on the share transfer forms were not that of the appellant and the same are forged. The opinion of the expert provided by the appellant was not considered by the AO and was brushed away casually. d. The statement was wrongly relied upon and no opportunity was given to the appellant to cross-examine the RTA. e. These share transfer forms indicate that majority of the shares were transferred to parties who were based in Gujarat whereas the appellant is based at Pune and, thus, it was not possible for the appellant to transfer shares to the parties based in various places in Gujarat. f. The signatures of the witnesses on the shares transfer forms were different and, thus, leads to a presumption that forgery o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt with the Company. The contention of the appellant that the expert opinion provided by the appellant with regard to his signatures was not taken into consideration is patently misconceived. The AO considered the expert opinion and found that it was not necessary as there were ample evidence to show that the signatures on the share transfer forms were that of the appellant. We are further of the opinion that no attempt was made by the appellant to get the signatures appended in the share transfer form compared with the specimen signatures kept with Company. Verifying and comparing the signatures of the appellant on the share transfer forms with the signatures of the appellant on other documents like PAN Card, Passport, Bank signatures are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly erroneous. The Companies Act did not at any stage prohibit the transfer of pre-split shares to the transferee. The contention raised does not have any merit. 12. Thus, the contention of the appellant that he had never sold the shares cannot be believed in as much as the signatures of the appellant on the share transfer form was duly verified from the specimen signatures kept with the Company. The contention that the signatures on the share transfer forms were forged was rightly disbelieved. 13. The appellant held 1,26,51,500 shares constituting 12.65% of the total paid up capital of the company and off-loaded 52,30,000 shares which constituted 5.23%. Regulation 13(3) required the appellant to make the disclosure with respect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration once a violation of the Regulations were found. 15. In our opinion, the imposition of a penalty of Rs. 4 crores on the aforesaid ground is not correct. We find that the decision of the Hon'ble Supreme Court in Roofit Industries Ltd. (supra) has been held to be no longer a good law by a larger bench of the Hon'ble Supreme Court in Civil Appeal No. 11311 of 2013 Adjudicating Officer, SEBI vs. Bhavesh Pabari decided on February 28, 2019 wherein the Hon'ble Supreme Court has held that Roofit Industries had erroneously and wrongly held that Section 15J would not be applicable. 16. We also find that in a near identical matter of Bhupendra Shah also a promoter in Safal Herbs Ltd. had sold 13.15% of its shareholding in violation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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